California jobless rate at 16.3 percent, a slight drop after shutdown orders were eased

Unemployment rates fell slightly across California last month, suggesting the beginnings of an economic recovery after the onset of the coronavirus pandemic sent business into a deep freeze.

The statewide unemployment rate dropped a tenth of a point, to 16.3 percent, as employers added 141,600 nonfarm jobs in May, the state Employment Development Department said Friday.

In greater Sacramento, unemployment dropped to 13.6 percent, down four-tenths of a point, as employers added 22,300 jobs throughout the region.

The numbers signify that, while the economy remains deeply troubled, the shutdown hasn’t done quite as much damage as initially feared. Gov. Gavin Newsom predicted unemployment could top 20 percent.

Now, it appears Newsom’s decision to gradually reopen the economy beginning in early May, following his mid-March stay-at-home order, is beginning to bear fruit — although recent surges in infections mean the worst isn’t necessarily over for the economy.

Jeff Michael, an economist at the University of the Pacific, said Sacramento’s job gains in May were striking; the region’s payrolls grew by more than 2 percent, more than any other major metro area in the state.

He said the region’s strong base of government employment has so far helped stabilize the economy compared to other cities that depend heavily on industries such as tourism.

Sacramento “isn’t quite as susceptible to the virus impacts,” Michael said. Another advantage is that Sacramento at one point recorded fewer infections, per capita, than other major cities, which may have given residents more confidence about venturing into shops and restaurants, he said.

He said Sacramento’s experience is in sharp contrast with Los Angeles, where infection rates have been considerably higher and the economy is more reliant on tourism and entertainment - two industries that for the most part haven’t begun recovering. Los Angeles’ unemployment rate in May was 20.9 percent, up from 20.8 percent a month earlier.

‘California’s economy has hit the bottom’

Newsom has allowed the opening of stores, restaurants, malls, barbershops and other venues to reopen, albeit with reduced capacity in most instances. The Sacramento area, for example, reported a gain of 7,700 jobs in the leisure and hospitality sector, which includes restaurants and hotels.

However, large gatherings at ballgames and other mass events are still off-limits, and on Thursday, amid fresh signs that COVID-19 infections are rising again, the governor ordered Californians to wear masks in most public places.

Despite the drop in unemployment, the rates are still among the highest in modern history. During the last recession, California’s unemployment rate peaked at 12.3 percent.

Business economist Song Won Sohn warned that full economic recovery from the effects of the coronavirus pandemic is still a long way off.

“California’s economy has hit the bottom and is recovering but is still far below its previous peak in February,” Sohn, of Loyola Marymount University in Los Angeles, said in a note to reporters.

“Nonfarm employment is 2.5 million below its peak in February. There are still over 3 million unemployed Californians from its low of 753,269 in January. If a second wave of the virus hits as the economy reopens, there could be further turbulence in the job market.”

Fresno County’s unemployment rate fell to 15.7 percent, from 16.9 percent a month earlier.

In the Modesto area, unemployment fell to 16.1 percent from 17.5 percent. In Merced County, the rate dropped to 16.5 percent from 18.7 percent.

San Luis Obispo’s unemployment fell to 12.7 percent from 14 percent.

This story was originally published June 19, 2020 at 9:50 AM with the headline "California jobless rate at 16.3 percent, a slight drop after shutdown orders were eased."